War on Iran delivers a body blow to already battered Indian airlines
With 180 flights axed in a day, 11 airspaces shut and oil prices climbing, Indian carriers face a new crisis on top of Rs 17,000-18,000 crore loss for FY26
Indian airlines have cancelled nearly 180 flights to West Asia in a single day as the US-Israel war with Iran closes airspace across the region's busiest international corridor — and analysts warn the damage is only beginning. If the disruption extends to weeks, carriers could absorb "hundreds of crores" in additional costs and lost revenue, piling onto the ₹17,000-18,000 crore net loss the industry was already staring at for FY26.
The timing could not be worse. Indian carriers were already under pressure from a string of major accidents and pilot-related crises last year, and the India-UAE route — the single densest international corridor for Indian aviation — sits squarely in the middle of the conflict zone.
With no clear timeline for airspace reopening, airlines are now recalculating everything from fuel costs on rerouted flights to crew scheduling and passenger refunds.
Busiest route
With Iranian and several Gulf airspaces effectively out of bounds, India-Europe and India-US flights that previously used shorter West Asian corridors must now be rerouted over alternative tracks, adding significant block time. The India-Gulf corridor is among the busiest for Indian aviation, carrying migrant workers, business travellers, and leisure passengers.
If hostilities around Iran and the Gulf become protracted, Indian airlines will have to redesign network plans for West‑bound operations, potentially favouring northern routings via Central Asia or Russia, where geopolitically feasible, or deeper codeshares with non‑Gulf partners.
Dubai, which is under attack from Iran, is also the most important hub for international airlines, and its entire revenue stream revolves around transport (aviation and shipping), tourism, and trade. Repeated strikes on the city could lead to a major review of its status as a key gateway for trade and commerce.
Structural shifts
Pushing oil prices higher
With Aviation Turbine Fuel (ATF) being the single largest cost head for Indian carriers, which is typically 35–40 per cent of an Indian carrier’s cost base, and moves broadly with crude (with some lag), a sustained $10–$15 rise in Brent tends to show up as a double‑digit percentage increase in ATF, squeezing margins unless fares rise. With demand still strong and capacity constrained by airspace closures, airlines will try to pass some of that through to international fares, but intensely competitive domestic markets make a full pass‑through unlikely.
DGCA's directive
The 11‑FIR no‑fly advisory until March 2 is an unusually wide safety cordon by DGCA standards, signalling that Indian regulators see this as a high‑risk air-defence environment, not a short‑term weather‑like disruption. This effectively blocks a major chunk of the traditional India–Gulf–Europe aviation corridor, forcing rerouting or cancellation of flights to and over these geographies.
Passengers stranded
